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The UK wants minor changes to Europe's proposed cap on bankers' bonuses. "We are responsible for 40% of the EU's financial services ... we want to make sure that international banks go on being headquartered here in the UK," Prime Minister David Cameron told Parliament.

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A senior official at the EU Court of Justice has rebuffed Britain's arguments against an EU cap on bankers' bonuses. UK Chancellor George Osborne has abandoned the effort, saying he won't pursue the legal challenge and will instead try to counter effects of the rule.

EU finance ministers have rejected British efforts to rein in a proposed limit on bankers' bonuses. AFME CEO Simon Lewis warned that the cap could have unintended consequences. "This is a threat to Europe's competitiveness," Lewis said. UK Chancellor George Osborne also cautioned his counterparts. "It will push salaries up, it will make it more difficult to claw back bankers' bonuses when things go wrong, it will make it more difficult to ensure that the banks and the bankers pay when there are mistakes, rather than the taxpayer," Osborne said.

Major banks in the City of London are considering filing a lawsuit against the EU regarding limits on bankers' bonuses. Meanwhile, UK Chancellor George Osborne is expected to encourage his EU counterparts to rein in proposed bonus caps.

Industry experts are voicing concerns about a potential cap on bankers' bonuses in the EU. The proposal would "increase fixed costs at a crucial time of bank restructuring", AFME CEO Simon Lewis wrote in an e-mail. "This will seriously harm European competitiveness and have a negative impact on the real economy."

European officials have been unable to agree on adding a cap on bankers' bonuses to Basel III rules. One sticking point is a proposal to make the cap triple the salary amount. Talks are scheduled to resume next week.